Fed ‘Independence’ Is A Scam. There Is No Reason To Prevent A Full Audit

Debunking the lies of corrupt politicians who claim a full audit would interfere with the Federal Reserve’s ‘independence’.

Congress will vote tomorrow on auditing the Federal Reserve.

The Federal Reserve says that an audit will interfere with it’s “independence”. For example, in Congressional testimony on 2009, the vice chair of the Fed used the “i” word 30 times.

Democratic whip Steny Hoyer is urging Dems to vote no on auditing the Fed in order to preserve the Fed’s “independence”:
Are the Fed and Congressman Hoyer right and the people wrong? Do we need to protect the Fed against a short-sited Congress which cares only about political concerns?
What the Last Audit Showed

Let’s start by looking at what information was revealed in response to the previous, watered-down version of Ron Paul’s Fed audit bill:

The Fed gave huge bailouts to foreign banks, including Gaddafi’s Libyan bank, the Arab Banking Corp. of Bahrain, and the Banks of Bavaria, Korea and Mexico

Moreover, there is strong evidence that the Fed’s decisions are often influenced by conflicts of interest. The non-partisan Government Accountability Office calls the Fed corrupt and riddled with conflicts of interest. Nobel prize winning economist Joseph Stiglitz agrees, saying that the World Bank would view any country which had a banking structure like the Fed as being corrupt and untrustworthy.
Intervening and supporting some market players (Goldman, AIG, etc.) and not others (Lehman, etc.) is precisely what Bernanke has been doing. Whatever can be said for the Fed in the past, picking winners and losers is “not the proper role for the central bank”, in Volcker’s words. Without an audit, we will never know which “winners” were saved and which “losers” were left to die, or why. Nor do we really currently know which bailouts and other actions were truly performed under emergency conditions – to stave off catastrophe – and which were done to help out financial companies for other reasons.

Moreover, Bernanke gave many billions to private foreign banks and foreign central banks (and see this). While Fed apologists say that the bank’s “independence” must be preserved, the fact that the Fed has sent trillions overseas shows the Fed is somewhat independent of American interests.

And the question has to be asked: Has the Fed been picking winners and losers among countries? Among private banks?

The Fed argues that an audit would interfere with its monetary policy decisions. That is incorrect for at least two reasons.

Initially, the bills to audit the Fed specifically provide that no outside agency will interfere with the Fed’s monetary policy decisions.

More importantly, decisions about what toxic assets should be accepted by the Fed as collateral, how such assets should be valued, and who bailout funds should be given to are wholly separate from the Fed’s core monetary policy decision: raising or lowering interest rates.

Adjustment of interest rates has been the primary lever the Fed has applied to the economy since it’s formation in 1913.

The Fed has also recently started using a radical new tool: replacing the money multiplier with interest payments for excess reserves deposited with the Fed. Personally, I strongly disagree with this as a policy tool because I believe that – in the name of preventing inflation – the Fed is guaranteeing prolonged deflation and the lack of a sustainable recovery. However, this is arguably an exercise of core monetary policy by the Fed.

But funneling hundreds of billions to foreign nations and foreign banks, accepting worthless junk from the too big to fails and marking it at unrealistic valuations, and doing the other things which the Fed has been doing recently are not core monetary functions. Congress never authorized these actions when they passed the Federal Reserve Act.

Therefore, the Fed’s actions must be made transparent and subject to the light of day.

Higgins News Network – HNN Headline News

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